Expenditure needs

Standard expenditure needs represent local authorities’ financial needs in relation to their territorial features and the sociodemographic characteristics of resident population.

The use of standard expenditure needs to allocate equalization grants allows to overcome the old criterion of the historical expenditure for resource allocation.

Today, this methodological approach is considered a best practice in designing financing systems for local authorities and offers an important chance to the Country to upgrade intergovernmental relationships and make the public expenditure of local governments more efficient.

Municipalities standard needs

During 2023, the methodology for determining Standard expenditure needs of Central General services and Local Police Functions was approved and the weight that Central General services take in the composition of the total standard expenditure needs was updated, increasing the share of general services included in the solidarity fund from 70 percent to 90 percent. The CTFS has planned to implement this adjustment gradually until it is stabilized by 2028. For the year 2024, a weight of 74% was considered.

During 2022, the methodology for determining the standard needs for the functions of Public Education was renewed, a function that includes the municipal services related to Kindergarten, Other School Orders (Primary and Secondary in 1 and 2 grades 1), Transport, Catering, Assistance and Transport and other complementary services such as Summer Camps. The approved methodological review made it possible to determine the standard needs of each municipality by considering a better characterisation of the school transport service and of labour costs.

During 2021, the methodology for determining the standard needs for the Nursery Service, which includes early childhood benefits for children aged 0-2 years, was renewed. For the Crèches service, the approved methodological review made it possible to determine the standard needs of each municipality through the recognition of the users served, assessed on the basis of the standard cost of each municipality and the possible recognition of a number of users necessary to reach the minimum level (assessed on the basis of a minimum standard cost of service identified in the standard cost for contributions and/or vouchers).

In 2020, methodologies were revised to determine the standard requirements for the Social Sector, the Traffic and Territory Function and the Waste Disposal Service. The methodological evolution met local governments’ different needs to grasp the local realities more precisely.

Regarding the Social care sector, the new methodology considers the provincial dimension as most suitable for capturing the elements that differentiate the expenditure levels.

As requested by local authorities over time, the new methodological approach changed the weight of the variable linked to the population in determining the standard expenditure needs for the  Function Planning and public roads.

The updated methodology do not consider the Waste Disposal Service in the calculation of standard expenditure needs.

The Wider Area Authorities standard needs 

In the course of 2021 the methodology has been renewed that allows to determine the standard requirements for the Agencies of vast area of the Regions to Ordinary Statute taking into account the dispositions introduced from the Law n. 56 of 2014 on the new institutional order of the provinces and metropolitan cities and the perimeter of the fundamental functions that these bodies are called to perform. The approved methodological review made it possible to determine the standard needs of each institution in monetary terms.